CEMIG Inks Deal with Petrobras - Analyst Blog

By: Zacks.com

Posted: 6/18/2013 9:33:00 AM

Referenced Stocks: ALE;CIG;CPL;ELP

Recently,
Companhia Energetica de Minas Gerais
(
CIG
)
, also known as CEMIG
, signed an agreement with Petróleo Brasileiro S.A (Petrobras)
for the purchase of 49% interest in Brasil PCH S.A. The deal
comes on the heels of the completion of an important acquisition
in Mar 2013.

CEMIG's subsidiary, Cemig Geração e Transmissão (CEMIG GT), will
conduct the stock purchase. The transaction value has been set at
R$650 million, with Jan 1, 2013 as the base date. The closure of
the deal, at present, is subject to closing conditions including
regulatory approvals.

Brasil PCH is a well-renowned power producer in Brazil and
controls 13 Small Hydro Plants. The company works independently
and primarily uses renewable energy resources. Power generated is
mainly sold to Eletrobras. Total installed capacity is estimated
at 291 MW, while assured generation is around 194 MW.

CEMIG has been investing in projects and targeting acquisitions
to attain its expansionary goals. According to management's
long-term plan, power generation is expected to increase from
30.4 terawatts-hours (TWh) in 2005 to 239.7 TWh in 2035.

CEMIG is one of the largest integrated electric utilities in
Brazil with approximately 97% of the company's installed
generation capacity being hydroelectric power. The Zacks
Consensus Estimate for 2013 and 2014 is pegged at $1.41 per ADR
and $1.46 per ADR, respectively. These represent a year-over-year
decline of 42.5% for 2013 and growth of 3.8% for 2014.